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*67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Cryptoassets are highly volatile unregulated investment products. No EU investor protection.
How to buy
For those who live in Ireland, the best way to buy Uniswap is, without any doubt, this popular broker.
eToro*, one of the main brokers around the world, is registered and licensed, among others, by the Cyprus Securities and Exchange Commission, and therefore complies with all the regulations of the European Union, the most demanding in the world.
We recommend eToro because you can create an account for free with this broker, and its fees for trading online are very low. Besides, eToro is available in your language, accepts users from Ireland, it is really easy to manage, and its friendly interface is ideal for those who are starting to trade with cryptocurrencies and stocks.
How to sign up, step by step
The first thing you need to do is click here and fill in the fields on the right: enter your name, email, and set a password.
Now check your email inbox: you have received an email from eToro, click on the link and your account will be verified.
Once on eToro, you just have to click on “Deposit funds”, in the page menu.
There, you can choose how much money you want to add to your account (the minimum is $ 200) and the payment method:
As you can see in the image, the first deposit can be made by credit card, PayPal, or bank transfer.
If you have a choice, we do not recommend bank transfer because it takes longer, and it can be very frustrating to see the price of Uniswap rising while you wait for your transfer to be done.
How to make your first purchase
As soon as eToro has confirmed the receipt of your credit, you just have to search for “Uniswap” in the search bar, click on “Invest” and choose the amount in dollars you want to invest.
*67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
What is Uniswap?
Uniswap is the most widely used decentralized cryptocurrency exchange today and one of the largest exchanges by daily trading volume. Although it is actually a smart contract that is responsible for providing liquidity to the exchange market automatically.
It was created in 2018 by Hayden Adams inspired by some comments from Vitalik Buterin, the genius behind Ethereum. The Uniswap smart contract was designed to fulfill three basic functions: exchanging, sending and stacking cryptocurrencies.
And because it is a smart contract on the Ethereum network, it allows these operations to be performed with any ERC-20 cryptocurrency. ERC-20 are cryptocurrencies that work on the Ethereum platform, among them we can mention BinanceCoin, Tether, DAI stablecoin, among others.
How does Uniswap work?
How we already mentioned, it is a smart contract implemented on the Ethereum network so there are no people behind its daily operation. All the operation was set in advance in the main contract and after executed, it cannot be modified in any way.
In addition, Uniswap contains a smart contract for each cryptocurrency pair exchanged on the platform. That is, there is a contract to exchange Ethereum for Tether, another for DAI for BinanceCoin, and so on for each pair that can be exchanged.
Similarly, it has another contract for sending cryptocurrencies that allows you to exchange one token for another before it is sent to the destination address. So, if you have Ethereum in your wallet and you have to pay for something with Tether, you can send the Ethereum with Uniswap and the person will receive Tether. All with a small commission of 0.30% per transaction.
The most interesting thing is that Uniswap maintains the liquidity balance in the market automatically based only on a mathematical formula. Although it is the Uniswap users who participate in the stacking or pooling that actually provide the liquidity.
In the latter, users who stack or pool in Uniswap, deposit an amount of cryptocurrencies to the contract that maintains the liquidity of a certain pair and in return receive interest on the deposit made. Like a savings account, but with cryptocurrencies.
In this way, Uniswap fulfills its three established functions in a completely decentralized way, controlled only by smart contracts within the Ethereum network and in a completely transparent way, as there is no way to alter its operation.
About Contracts for Difference
If you browsed eToro previously, you probably realized that the initials CFD appear frequently. Before we explain what this is, you should know that cryptocurrency trading on the platform is only CFD if you are short-selling or leverage above x2 (but the platform does not even allow this option).
If you are interested in day trading cryptocurrency and other advanced operations, later on we will also explain concepts like leverage and “going short”.
The advantage of eToro is that it allows you to bet both “in the black” and “in negative”. For instance, you believe that the Uniswap will go down, so the logical thing is to think “if it is going to depreciate (go down in price), I simply refrain from getting in and I'll go in when it has gone down”. But if you really think that it's going down, why not making some profits?
You can accomplish that by “going short”. Here's how it works:
- You ask someone to lend you, for instance, 100 units of Uniswap, which cost $ 5,000 at the moment (these figures aren't real)
- Then, you earn $ 5,000 by offering them at their price at that moment
- The Uniswap goes from $ 50 to $ 30 (as you thought, the price decreases)
- You buy all 100 units one more time, but at the current value, $ 3,000
- Then you return the 100 units to the person that loaned them to you
- The rest is yours, so, you will have earned $ 2000
It is really simple. Just keep in mind that by trading in Uniswap on eToro, with CFDs you can make a profit when you anticipate the price will fall.
Futures Vs CFD
Here are the most important differences between CFDs and Futures, in case you want to know more:
- Futures: the counterparty is another investor or trader.
- CFDs: you don't “play” against another individual, but the counterparty is the broker.
- Date of expiry:
- Futures: they have an expiry date. Once the contract expires, it is closed and can't be reopened.
- CFDs: they do not have an expiry date. It is possible to get back to a good position before exiting.
- Futures: there are limited options for investment
- CFDs: they include lots of different assets, commodities and currencies
- Minimum deposit:
- Futures: you need to enter with a larger amount
- CFDs: you can start with a small initial deposit
- Trading costs:
- Futures: being higher figures, the costs are, commonly, proportionally lower
- CFDs: costs are higher
- Futures: you can't leverage
- CFDs: it is always possible to leverage
Trading with leverage
If you are not familiar with the term “leverage”, we'll put it short. When trading, it's the capacity of multiplying your investment without putting extra money. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Suppose now that you are sure that the price of Uniswap is about to raise its price, and you are thinking about “going long”.
You are absolutely sure that Uniswap will go up, but you only have $ 1,000 available. Despite that, why miss the opportunity to make more money?
Perhaps you could go to your bank, ask for a credit, wait for it to be accepted, wait for the money, and then buy Uniswap… However, once you've managed doing all that, probably Uniswap would be already at a much higher price (if your prediction got confirmed), and it wouldn't be a good idea to invest then.
With leverage, you can get that amount of money really easily. It's like a loan, but much easier and quicker, and with the benefit that you will be getting it directly from eToro which will let you invest much more than you have on the platform's wallet. Before trading, you will be able to choose between the different leverage options as in the image:
With other assets, you can use more leverage. Why? Because leverage is most common in short-term operations, and cryptocurrencies tend to be a medium or long-term investment. That said, I'm going to explain better how leverage works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 was borrowed from eToro).
- Then, turns out that Uniswap does increases, as you thought, and now the cost of your investment is $ 2,400 (20% higher), so you decide to sell back.
- Once the $1,000 from leverage is returned, you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours from the beginning.
As you can see, with $ 1000 you get $ 400, in other words, 40% more. Not bad, right?
But not everything is wonderful. If all goes as you intended and the price goes up, you will make profits. However, if the price falls, you will also lose more money than you invested.
For instance: if the price falls by 10%, you do not lose $ 10, but twice that figure, which means $ 20, because of the leverage. That is why the concepts of Take Profit and Stop Loss are so important when operating with leverage.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you bought Uniswap at $ 100, you request eToro to close once it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps going up, which could be a mistake.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). You always need to set a Stop Loss lower than that suggested by eToro.
Financial assets available in this broker
Besides crypto, there are other financial instruments you can trade in eToro.
The most common financial instruments are stocks or shares: these are portions of publicly traded companies. It is possible to be a shareholder of a company and obtain a profit, but you must know where and how to invest your money.
We can categorize stocks into two main types: the ones that divide their earnings regularly among the stockholders, and those that don't. The former ones are great, obviously, but investing in the latter can also be a good idea since the profit you can make by selling the shares can be even larger.
When trading on eToro, if you invest in equities that give dividends, you will receive them in your account, and you can withdraw those funds or reinvest them. Our suggestion is, if you don't need the money immediately, that you don't renounce the magic of compound interest and reinvest it in the company itself.
If you trade with stocks on eToro, you can use leverage. However, we don't recommend that, since it would be a CFD and you would not get dividends. On top of that, shares are usually long-term investments, and you have to pay commissions.
Have you heard about Exchange-traded funds or ETFs? They are passively managed funds, known for merging the advantages of stocks and mutual funds: they can be exchanged regularly at market price, but have much more variety and considerably lower rates.
Foreign exchange trading or Forex consists, as the name says, in the exchange of currencies. It's the conversion between currencies to make a profit through the operation.
If you want to exchange EUR and USD, you speculate how many dollars it will take to buy a euro, therefore you hope that after buying the first currency (the euro) it will raise its price compared to the second (the dollar), to make a profit by selling it. Let's say you entered when the price of one euro is 1.10 USD and you exit when the price has gone up to 1.15: that difference is yours once you make the operation.
You may be thinking by now that trading with currencies requires investing considerable amounts, and that is correct, since fluctuation in prices is never that dramatic, and often you will need to use high leverage (which is an important risk). If you are just starting to trade, we don't recommend beginning with Forex, because it is very risky and intricate.
eToro allows trading with the most common currency pairs. However, bear in mind that in this market sales are always made through contract for differences, so the underlying asset won't be yours.
How to deposit funds on eToro
Within the payment options that you will find on eToro are: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. Depositing money on eToro is so simple: go to “Deposit funds”, set an amount and choose the payment method you prefer.
Evidently, for security reasons, you need to be the holder of the account or the credit card.
You can start with a $ 200 deposit, and if you are not verified you will have a maximum amount allowed. So, if you intend to trade with large amounts, you should contact Support to verify your account.
Additionally, remember that you can make the deposit in any currency since eToro will make the conversion automatically to USD, although it charges a fee, so it is preferable to make the transfer directly in USD.
When trading cryptocurrencies, there are different possible methods or strategies, like buying and holding or day trading, for naming just a couple.
My suggestion for those who are starting to trade is going halfway between the two options: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For instance, if you purchase a cryptocurrency when its price is $ 15, it increases to $ 25 and decreases back to $17, the stop-loss will close your position at $ 21 or $ 22. Therefore, you will obtain a fine profit.
You may be wondering: why not selling back when the price is at its peak? But unless you are a psychic, that is just impossible. The mentioned strategy can work perfectly and is much more realistic.
Later on, you will be able to apply more sophisticated techniques, such as using leverage or going short.
For those who still don't have much experience in investing, a demo account can be very helpful. Just assure yourself that the virtual mode is set and you can start operating with fictional funds.
A virtual account can be a good way of practicing before starting to operate with real funds. When you create your demo account, you will begin with a virtual amount of $ 100.000, to trade with a variety of financial instruments available on the platform, besides Uniswap.
If your trials don't go as planned and you go back to zero, there is always a possibility to replenish your virtual balance. The second time will probably be better.
But keep in mind that trading is mainly about being cautious, and demo account trading can have the opposite effect. It is completely different to risk your real savings than to operate with a fake balance that you don't mind losing.
Finally, if you are interested in trading in the long or medium-term, there is no point in using the virtual mode and having to wait for years. On the other hand, it can be ideal if you want to practice short and medium-term investment.
How does eToro work?
We mentioned previously that eToro is very friendly and intuitive. Anyone can start investing without having to read endless explanations.
Everyone who has previously used Instagram, Pinterest or any of the most common social networks, knows enough to use eToro.
Let's talk about how to register and the different tabs you will find on the platform.
First, you will have to enter your personal data.
Additionally, you will see that they ask you some questions about your experience as an investor.
But don't feel intimidated, it is not a test that you have to pass. The objective is to know more about you and be clear about which financial instruments they should recommend according to your knowledge and experience.
Let's review the different functions of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security is at a certain price. This is perfect if you want to buy a security that is falling but you believe it will decrease even more.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we discussed before, the different financial instruments that eToro offers are:
- Forex trading
- Index funds
The concept “social trading” comes to life in the section “People”: that is where you can duplicate the strategies of any user you choose. You'll be able to see all their profiles and historical performances.
You can search for those investors that you find more interesting: by average profits, market or risk level, for instance. Just indicate the amount you want to invest and eToro itself will replicate the movements of the investor you selected, in proportion. This means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your balance in that asset.
Also, here you will see CopyPortfolios classified into three categories, Top Trader, Market, and Partner.
Sometimes it might be preferable to copy from CopyPortfolios than to individuals, because the former offer more diversity. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … You think that a certain sector is going to succeed anytime soon? Then you will surely find a CopyPortfolio about it.
What is social trading?
The first platform that thought of trading as a social activity was eToro, and the idea spread like wildfire. Other brokers have also taken this concept, but eToro is way better.
But it wasn't just about creating yet another social network to talk about investment. The real innovation was in the possibility for users to replicate the strategies of experienced traders, who were in turn paid for their ideas.
It sounds complex but it isn't: when you access eToro you will find in the menu on the left the options “Copy People” and “Invest in CopyPortfolios”.
“CopyPortfolios” are types of exchange-traded funds or thematic index funds, a portfolio that bundles a number of financial assets in a certain sector. Let's say that you consider that the gaming industry is going to succeed shortly but you don't have enough information (or time) to choose stocks, you just have to pick the CopyPortfolio “InTheGame”, which includes Microsoft, Google, Tencent, NVIDIA, Logitech, Intel, AMD, Nintendo, Ubisoft, Unity…
At the date of writing this article, this CopyPortfolio has generated a 100% profit in the last twelve months, and you just need to click on “Invest”, select the amount, place the stop-loss and wait.
But you can also copy other successful investors of the platform. With “Copy People” you can find them and imitate their investments easily.
You will find in the profile of each user: the kind of financial instruments they trade, their risk profile (a higher risk implies higher possibilities of earning more or losing more money), as well as their trading history.
Besides duplicating other investor's moves, which is really interesting and helpful, we also recommend that you benefit from the community by reading other user's comments. You can learn a lot from their experiences, mainly if you aim to make a living from investments.
* Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Disclaimer: 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.